A Comprehensive HR Guide on Ending Employment Relationships Gracefully

Terminating an employee is never a pleasant experience. It’s an emotionally charged situation for both the employer and the employee, and it must be handled with extreme care. Doing so will ensure that the process goes as smoothly as possible for all involved parties. Here are some tips on how to handle terminations with care.

Be Respectful & Professional

It’s important to remember that employees are people—not just robots programmed to do a job. Treat them with respect, dignity, and compassion. Even if you don’t agree with their decisions or actions, they deserve to be treated like human beings throughout the entire process of termination. This includes being honest about why they are being let go, providing feedback in a supportive way, and helping during the transition period.

Allow for Questions & Clarifications

When notifying an employee of their termination, provide them with time to ask questions and get clarification about what will happen next. Have all relevant documents ready to explain any benefits or severance packages that may be offered after their departure from the company. Providing these documents upfront allows employees to understand exactly what they can expect and gives them peace of mind once they leave your organization.

Keep Everything Documented

It’s also important to document everything related to the termination process—from emails leading up to the meeting where you inform the employee of their termination all the way through to their final paycheck stubs. This is especially important if you need legal protection in case there is a dispute down the line over anything related to the termination process.

Documentation ensures that everyone involved in this process is held accountable and provides a measure of security for both parties should any issues arise in the future. By keeping everything properly documented, employers can rest assured knowing that they have evidence should any claims come up against them later on down the line.

For many organisations, redundancy is a last-resort and a challenging time for all those involved. This guide to give you all the information you need when considering redundancy to ensure you are following procedure and making it a fair process.

When to consider making a redundancy?

If you no longer need anyone to fulfil a role then you can dismiss an employee through redundancy. However, you must be able to demonstrate that the employee’s job will no longer exist.

Employee rights

Employees have certain rights and may be entitled to redundancy pay if they are made redundant.

All employees under notice of redundancy have the right to:

• reasonable time off to look for a new job or arrange training
• not be unfairly selected for redundancy

Non-compulsory redundancy

There are two different types of non-compulsory redundancy:

• Voluntary redundancy: You can ask employees if they would like to volunteer for redundancy, but you must still follow a fair and transparent selection process and tell employees they will not automatically be selected just because they applied.
• Early retirement: This is where you offer employees incentives to retire early. The offer must be made across the workforce, and it must be the employee’s choice to accept the offer.

Compulsory redundancy

If you decided that you need to make compulsory redundancies, then you must follow a process to identify the employees selected for redundancy through a fair process. The selection criteria may include:

• skills, qualifications, and aptitude
• standard of work and/or performance
• attendance
• disciplinary record

You can select employees based on their length of service but only if you can justify it, and this must not be your only reason as it could be deemed age discrimination. It could also be indirect discrimination if it affects one group of people more than another.

Selection an employee for redundancy based on the below reasons is automatically unfair:

• pregnancy, including all reasons relating to maternity
• family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants
• acting as an employee representative
• acting as a trade union representative
• joining or not joining a trade union
• being a part-time or fixed-term employee
• age, disability, gender reassignment, marriage and civil partnership, religion or belief, sex and sexual orientation
• pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage

Redundancy consultations

If you do not consult employees in a redundancy situation, any redundancies you make will almost certainly be unfair and you could be taken to an employment tribunal.

If you are making 20 or more employees redundant then you must follow ‘collective consultation’ rules. If you are making fewer than 20 redundancies then there are no set rules to follow, however, we strongly advise consulting with employees and their representatives to avoid an unfair dismissal claim.

Consultation does not have to end in agreement, but it must be carried out with a view to reaching it, including ways of avoiding or reducing the redundancies.

Collective consultation

As per the government website, you must follow these steps when holding collective consultation:

1. You must notify the Redundancy Payments Service (RPS) before a consultation starts. The deadline depends on the number of proposed redundancies.
2. Consult with trade union representatives or elected employee representatives - or with staff directly if there are none.
3. Provide information to representatives or staff about the planned redundancies, giving representatives or staff enough time to consider them.
4. Respond to any requests for further information.
5. Give any affected staff termination notices showing the agreed leaving date.
6. Issue redundancy notices once the consultation is complete.

The deadline for notifying RPS depends on the number of proposed redundancies.

Number of proposed redundancies

When notification to RPS must be given

20 to 99

30 days before the first redundancy

100 or more

45 days before the first redundancy

You can be fined an unlimited amount if you do not notify RPS.

Consultation

There is no time limit on how long consultations last, but there is a minimum period before you can dismiss any employees.

Number of proposed redundancies

Minimum consultation period before dismissal

20 to 99

30 days

100 or more

45 days

Information you must provide to representatives or staff

You must provide written details of:

• the reasons for redundancies
• the numbers and categories of employees involved
• the numbers of employees in each category
• how you plan to select employees for redundancy
• how you’ll carry out redundancies
• how you’ll work out redundancy payments

Giving staff notice

You must give staff notice and agree a leaving date once you’ve finished the redundancy consultations.

Give staff at least the statutory notice period, based on how long they have worked.

Length of service

Notice you must give

1 month to 2 years

At least a week

2 years to 12 years

A week’s notice for every year employed

12 or more years

12 weeks

You can allow staff to leave earlier than the planned leaving date (for example without notice) by offering payment in lieu of notice.

Notice pay

You must give staff notice pay - based on their pay rate and notice period - or make a payment in lieu of notice.

Pay in lieu of notice

If you have included a payment in lieu of notice clause in the employment contract, you can end your staff’s employment with no notice. This lets you make a payment to cover the notice period they would have worked.

These payments must have tax and National Insurance deducted.

When you make payments in lieu of notice, you still have to pay staff the basic pay they would have got during the notice period. You also have to pay pension, private health care insurance or other contributions if it’s in the employee’s contract.

Redundancy pay

Employees you make redundant might be entitled to redundancy pay - this is called a ‘statutory redundancy payment’.

To be eligible, an individual must:

• be an employee working under a contract of employment
• have at least 2 years’ continuous service
• have been dismissed, laid off or put on short-time working - those who opted for early retirement do not qualify

You must make the payment when you dismiss the employee, or soon after.

A redundant employee also has the right to a written statement setting out the amount of redundancy payment and how you worked it out.

Statutory redundancy pay rates

These are based on an employee’s age and length of employment and are counted back from the date of dismissal.

Employees get:

• 1.5 weeks’ pay for each full year of employment after their 41st birthday
• a week’s pay for each full year of employment after their 22nd birthday
• half a week’s pay for each full year of employment up to their 22nd birthday

Length of service is capped at 20 years.

If you were made redundant on or after 6 April 2022, your weekly pay is capped at £571 and the maximum statutory redundancy pay you can get is £17,130. If you were made redundant before 6 April 2022, these amounts will be lower.

Employees who’ve been made redundant only pay tax on payments over £30,000. They do not pay any National Insurance.

Tax and National Insurance are deducted from other termination payments, for example payment in lieu of holiday or notice.

You can give your staff extra redundancy pay if you want to or have a qualifying period of less than 2 years.

If you fail to pay redundancy pay or if an employee disagrees with the amount, they have 3 months from the date their employment ended to make a claim for payment to an employment tribunal.

If an employee does not claim in time, a tribunal still has 6 months to decide whether they should get a payment.

Terminating an employee is never easy but it does not mean it has to be handled without care or respect for those affected by it. Employers should make sure that they treat employees with compassion throughout this difficult process by being honest about why someone is being let go, providing feedback in a supportive way, allowing for questions and clarifications, and keeping everything documented properly at every step along the way. Doing so will help ensure that this process goes as smoothly as possible while protecting both parties involved in case any legal issues arise down the line.